A Manifesto for Values Expression

Every financial transaction between participants is an expression of values. In the traditional financial system, individuals and organizations make decisions every day with their financial assets. They shop at some places instead of others, donate to specific causes, and even choose not to engage in certain financial interactions. Examples include refusing to lend money to known criminals, fossil fuel divestment, and sending money through certain trusted intermediaries.

Public blockchains revolutionize global financial collaboration through trust-minimized, neutral infrastructure that ensures ownership over one’s financial assets. However, the application stack of these blockchains lacks a crucial component that exists in our current world: the ability for participants to easily discern who they transact with. This fundamental problem prevents broader mainstream adoption of digital assets. At Predicate, we seek to create foundational, neutral, and decentralized technology that empowers communities and individuals to express and own their values.

Transactions Express Values

In the current blockchain paradigm, transactions are handled the same whether they fit participants’ ethos or run counter to them. For example, borrowers in a DeFi protocol must treat stolen ETH the same as all other assets in the pool. Similarly, liquidity providers that deploy assets into a DEX pool must facilitate swaps for terrorist financiers the same as for a normal user. In both of these cases, among many others, participants do not have the ability to precisely discern what types of assets they interface with or the transactions they facilitate.

Transactions are an extension of values. A common and crucial form in which values are expressed is compliance, especially in traditional finance. Regulators and policymakers implement policies which demonstrate their ethos (and hopefully the populace’s) on what are acceptable and unacceptable transactions. In a decentralized technology stack, government-based compliance is just one possible value; blockchain technology affords a pivotal opportunity for users and ecosystems to define values that vary across societies. As Yuval Noah Harari describes in Sapiens, money can truly become, “the most universal and most efficient system of mutual trust ever devised.”

Thus far, however, the primary mechanisms for values expression on blockchains are web2 compliance frameworks in the form of centralized know your customer (KYC) solutions or API integrations with blockchain data analytics providers. This approach imposes fixed, top-down categorizations by centralized entities with limited input from other stakeholders—making it highly vulnerable to human fallibility and exclusion. Formal KYC structures used in traditional compliance, for example, remain exclusionary at their core with approximately 1 billion people lacking formal proof of identity. Neutrality is inherently lost without systems for broader expressivity and ownership.

Adding Values Expression

Web3 communities must be able to define their transaction values in an ever-changing world. This requires mechanisms for bottoms-up values expression operating in harmony with credible neutrality. Neutrality is crucial for core infrastructure, such as the Ethereum blockchain. The technology stack on top of permissionless infrastructure, however, can be opened for users and ecosystems to express values.

For values expression to work in web3, the infrastructure must be trust-minimized and decentralized. If centralized, any system used by ecosystems at best creates centralized vulnerabilities for otherwise decentralized systems, and at worst risks censorship from external gatekeepers imposing their own views. We envision application layers operating on top of permissionless infrastructure to be rich with different views across the web3 ecosystem. One example could be an ecosystem choosing to limit their community currency’s usage to participants within a certain geographic region. And of course, these views can be biased, differ, or change—such diversity is crucial for decentralization.

Ownership of Values

Trust-minimized decentralized infrastructure also ensures ownership over values. Ownership is crucial because it reflects both a fundamental principle of web3 development, and also allows for a limitless range of self-sovereign values expression. Ecosystems can change values over time without relying on another party. As a result, values on the application level evolve as ecosystems and society change more broadly.

In today’s financial system, participants are forced to transact through pathways that may not represent their personal ethos or in certain instances be in direct contradiction to them. An ownership-first system allows for web3 application participants to create and nurture a system that expresses their own respective values. The result is composability radically different from today’s setup. Fully realized ownership of values leads to intersubjective networks between end users and ecosystems (credit to Sreeram Kannan for the term “intersubjective compliance”). Transactions and interactions become predicated on socially shared values.

As developers integrate values expression into applications, they make it possible for participants to choose global pathways that most adhere to the way they want to interact with the world. A user in this intent-centric architecture would have the ability to route their transactions through applications that most adhere to their values. In an intersubjective system, users relate to one another according to values’ alignment rather than blindly transacting. Values expression starts from the technology stack and eventually is naturally expressed by the participants themselves who use these tools. This evolution in financial systems is rooted in the fabric of humanity itself—homo sapiens’ “unprecedented ability to cooperate flexibly in large numbers” with “countless numbers of strangers” through shared beliefs and culture as noted by Harari in Sapiens.

Building Values Expression Systems

Predicate is a network for simplifying transaction prerequisites, which can power values expression systems. Through Predicate, users, developers, and communities define rules for onchain interactions, integrating expressive pre-transaction logic into decentralized applications. These rules, like legos, can be stacked to form policies, which are enforced by the Predicate Network. Reach out or follow us on Twitter to keep up with our work.